The Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has suggested to Prime Minister Balendra Shah that the government's role in promoting investment and economic development in the country should be that of a facilitator and coordinator rather than a regulator.

During a meeting with Prime Minister Shah at the Office of the Prime Minister and Council of Ministers in Singha Durbar on Wednesday, President Shrestha emphasized the need for bold decisions to break the cycle of protectionism, the informal economy, and administrative hassles in order to revitalize the economy.

He urged the Prime Minister to move forward in cooperation with the private sector to implement the concepts of change, transformation, transition, and transfer put forward by the government. Noting that the private sector currently contributes 81 percent to the national economy and 86 percent to job creation, he stated that it is now facing serious challenges, with low market demand, sluggish investment, and excessive regulatory pressure undermining business confidence.

On the occasion, President Shrestha informed that Prime Minister Balendra Shah believes the government will move forward in collaboration with the private sector, given its important role in the country’s economic development and prosperity. “In the meeting, we had an open discussion with the Prime Minister on issues facing the private sector, the current state of the economy, and possible solutions,” President Shrestha said. “The Prime Minister stated that the government would handle infrastructure development, while the private sector would drive economic development, and expressed the government’s commitment to facilitate this. He also said such meetings would continue. The private sector has taken this positively.”

President Shrestha welcomed the government’s targets of 7 percent economic growth, raising per capita income to 3,000 US dollars within the next 5–7 years, building a 15 trillion rupee economy, and creating 1.2 million jobs, but noted that achieving these goals would require overcoming the challenge of freeing the economy from the ‘credit, liquidity, and asset trap’.

He noted that Nepal’s economy is becoming more consumption-oriented than production-oriented, and that dependence on imports for about 70 percent of goods is a matter of concern, stressing the need for policies that prioritize local production.

He suggested classifying industries based on their use of raw materials as 100 percent domestic, mixed, or 100 percent imported, and adopting different policies for each, as well as encouraging assembling and contract manufacturing.

The Federation urged the Prime Minister to promptly implement the provisions in the budget to repeal 15 old acts including the Black Market Act, as well as sunset laws, debt recovery laws, and intellectual property protection laws. During the meeting, the Federation also drew the Prime Minister’s attention to the need for a special ‘restructuring and stimulus package’ for the revival of small, cottage, and medium industries in crisis.

To address excess liquidity and rising non-performing loans in the banking sector, the Federation suggested that banks fully comply with the limited liability provisions in the Companies Act, expand soft loan facilities, and revive sick industries through the Insolvency Act. The Federation also urged a review of bank watchlists, blacklisting provisions, and working capital loan guidelines through mutual agreement between banks and clients, and called for a flexible dividend policy to increase liquidity in the market.

Similarly, the Federation recommended that the Prime Minister introduce a contract farming policy for the commercialization and mechanization of agriculture, and develop the areas surrounding the Bheri–Babai, Sikta, and Sunkoshi–Marin Diversion Projects as agricultural pocket areas.

Likewise, the Federation suggested that special economic zones (SEZs), export promotion zones (EPZs), dry ports, exhibition centers, tunnels and road infrastructure, and sales and display centers for domestic products in various tourism-potential districts should be developed and operated under the public–private partnership (PPP) model.

The Federation expressed disagreement with the provision requiring private sector representatives participating as institutional representatives on government boards and committees to submit personal property details. President Shrestha conveyed to the Prime Minister that it is not justifiable to require individuals serving on boards for a fixed term, who are not government appointees or holding positions of benefit, to submit personal property details as institutional representatives.

The Federation suggested that errors in the financial sector should be addressed through fines rather than criminal cases, that arrangements for advance bail should be made, and that ‘media trials’ should be stopped, respecting personal privacy in ongoing investigations.

Since Nepal’s tax-to-GDP ratio is among the highest in South Asia, the Federation proposed implementing a ‘unified tax code’ by integrating taxes at the federal, provincial, and local levels to reduce business costs.

To facilitate industrialization, President Shrestha called for special exemptions on land ceiling for industries, simplification of the Environmental Impact Assessment (EIA) and Initial Environmental Examination (IEE) processes, and immediate payment of about 5 billion rupees in outstanding export incentive grants to exporters through tax or customs reconciliation.